Table of Content

    Do you want to start driving school business?

    Are you thinking about starting a driving school? The biggest advantage of starting this business is that you can start it with lower initial investments as compared to other businesses and can make it extremely profitable, provided that you plan and execute it successfully. But there are a lot of things which need to be considered before starting this venture.

    The first thing is how to secure the license and permits for starting a driving school. In addition to that, you should also consider whether you will purchase the required cars or procure them on the lease. So, the first step you should take is to develop a comprehensive business plan for driving school covering all aspects of your business.

    The business plan will not only help you in startup but will also form the basis of your company’s future policies. So, for assisting you with writing an effective business plan, here we are providing the business plan for a driving school business startup named ‘Star Driving School’.

    Executive Summary

    2.1 The Business

    Star Driving School will be a licensed and insured driving school in Manhattan that will mainly provide private and commercial driving education to its customers along with other related services for business.
    The business will be owned by Mark Gill. Mark is an MBA from Harvard and has served in various managerial positions at various driving schools in the United States that’s why he knows everything about how to open a driving school business.

    2.2 Management

    The company will hire a staff comprising of trainers, assistants and sales executives, all of which will be trained for one month prior to onboarding.

    2.3 Customers

    Star Driving School will be a licensed driving school where we will offer driving classes for people belonging to all age-groups along with specialized classes for professional drivers.

    2.4 Target of the Company

    The business targets are to balance the cost of a startup within the next year of launch and to become the best driving school in Manhattan. Our sales and revenue targets for next three years are summarized in the chart below:

    Driving School Business Plan - 3 Years Profit Forecast

    Nonprofit Start-Up Business Plan
    Discloses concept of non-profit/charity organizations to attract financing from donors, government agencies, and investors.

    Company Summary

    3.1 Company Owner

    Star Driving School will be owned by Mark Gill. Mark is an MBA from Harvard and has served in various managerial positions at various driving schools in the United States.

    3.2 Why the Business is being started

    Mark has an entrepreneurial mind and by starting a driving school business he aims to make profits in this industry.

    3.3 How the Business will be started

    Star Driving School will be located at a ten minutes’ drive from the main residential district of Manhattan. In addition to the usual inventory, the company will initially procure 10 cars with varying engine capacities, 3 minibusses, and 2 medium-sized commercial trucks. All vehicles will be procured on lease for a duration of 5 years after which the leasing contract will be renewed.
    The costs for startup are as follows:

    Driving School Business Plan - Startup cost

    The startup requirements are as follows:

    Start-up Expenses  
    Legal $75,500
    Consultants $0
    Insurance $62,750
    Rent $22,500
    Research and Development $42,750
    Expensed Equipment $42,750
    Signs $1,250
    TOTAL START-UP EXPENSES $247,500
    Start-up Assets $0
    Cash Required $322,500
    Start-up Inventory $52,625
    Other Current Assets $222,500
    Long-term Assets $125,000
    TOTAL ASSETS $121,875
    Total Requirements $245,000
    START-UP FUNDING $0
    START-UP FUNDING $273,125
    Start-up Expenses to Fund $121,875
    Start-up Assets to Fund $195,000
    TOTAL FUNDING REQUIRED $0
    Assets $203,125
    Non-cash Assets from Start-up $118,750
    Cash Requirements from Start-up $0
    Additional Cash Raised $118,750
    Cash Balance on Starting Date $121,875
    TOTAL ASSETS $0
    Liabilities and Capital $0
    Liabilities $0
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $0
    Other Current Liabilities (interest-free) $0
    TOTAL LIABILITIES $0
    Capital $0
    Planned Investment $0
    Investor 1 $312,500
    Investor 2 $0
    Other $0
    Additional Investment Requirement $0
    TOTAL PLANNED INVESTMENT $695,000
    Loss at Start-up (Start-up Expenses) $313,125
    TOTAL CAPITAL $221,875
    TOTAL CAPITAL AND LIABILITIES $221,875
    Total Funding $265,000

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    Services for customers

    Before you write a driving school business plan, you must decide on what services will you provide to your future customers. It will also help you to acquire permits and license from the local governing bodies.
    Star Driving School will be a licensed and insured driving school in Manhattan that will mainly provide private and commercial driving education to its customers along with other related services. Our main services include:

    • Driving classes for all individuals aspiring to learn car driving
    • Special driving classes for professional drivers aspiring to learn bus and truck driving
    • Short driving refresher courses
    • Advisory and consultancy services for helping students acquire driving licenses and car documents

    Marketing Analysis of driving school business

    Note

    The most important component of a driving school business plan is its accurate marketing analysis because it decides whether a startup in this industry will become a success or end in failure. That’s why an accurate marketing analysis must be carried out before developing the business plan for driving school.

    If you have no idea about how to start a drivers Ed school you can take help from this sample template. But if you are starting on a large scale then it is better to seek the help of marketing experts. A successful marketing analysis will tell you which region or area will be most suitable to open driving school business and will also help you later in the estimation of driving school start up cost.

    5.1 Marketing Trends

    There are more than 8,000 driving education businesses associated with the Driving Schools Association of the Americas. Out of these 8,000 institutes, there are 6,000 professional driving schools. The number of driving education institutes has constantly increased over the recent years and is expected to increase at the same rate for the next few years. Considering these stats, we can establish that any business plan for driving school can become extremely profitable provided that you plan it successfully.

    5.2 Marketing Segmentation

    Our target market is the residential community living nearby at the 10 minutes’ drive from our office. The community consists of all types of people from varying backgrounds. There are currently more than 738,000 households in Manhattan out of which 17.1% have children under the age of 18 living with them, 25.2% are married couples living together and 10.9% are persons with 65 years of age or older. Our experts have identified following target groups for our services:

    Driving School Business Plan - Market Segmentation

    The detailed marketing segmentation of our target audience is as follows:

    Landlord business plan

    5.2.1 Beginners:

    The first group of our customers comprises of those teenagers who just turned 18 years of their ages and want to learn how to drive. These beginners are mostly high school students.

    5.2.2 Learners:

    The second category includes those people who are in the possession of a vehicle and need a license to hit the road. These learners will be subjected to proper driving training and will also be helped with acquisition of driving licenses and car documents.

    5.2.3 Professionals:

    The last category includes commercial drivers or those people who want to pursue a career in driving by learning bus or truck driving. This group will be subjected to vigorous training and special road safety education.
    The detailed market analysis of our potential customers is given in the following table:

    Market Analysis
    Potential Customers Growth YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 CAGR
    Learners 48% 22,334 32,344 43,665 52,544 66,432 10.00%
    Beginners 18% 11,433 13,344 16,553 18,745 20,545 13.43%
    Professionals 34% 18,322 19,455 20,655 22,867 24,433 15.32%
    Total 100% 52,089 65,143 80,873 94,156 111,410 9.54%

    5.3 Business Target

    Our driving school business plan targets are:

    • To become the best driving school in Manhattan within next 5 years
    • To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
    • To balance the initial cost of the startup with earned profits by the end of the first year

    5.4 Product Pricing

    Product pricing is also one of the main deciding factors in the success of a startup that’s why we have priced our services in slightly lower ranges (10% less) as that of the prices offered by our competitors.

    Strategy

    Like marketing analysis, sales strategy for business is also an important component of driving school business plan so it must be thought through before you think about how to open a driving school business.

    6.1 Competitive Analysis

    There are thousands of established driving schools in the United States and it is not easy to survive and excel in such a competitive environment. That’s why you need to come up with something different before you start a driving school business. Our competitive advantage lies in the power and dedication of our team. We have the best team of experienced trainers who are willing to go to any limit for ensuring customer satisfaction. On top of that, our prices are very reasonable and comparatively lower than most of our competitors, thus giving us a clear advantage over other competitors.

    6.2 Sales Strategy

    We will attract our customers towards us through various efforts, such as:

    • We will advertise our driving school in magazines, newspapers and social media
    • We will offer discounts on the membership for the first three months of the launch
    • We will arrange seminars and awareness sessions on the importance of road safety in various educational institutions which will also promote our company
    Any questions? Get in Touch

    6.3 Sales Forecast

    Our sales are forecasted in the following column charts:

    Driving School Business Plan - Unit Sales

    The detailed information about sales forecast is given in the following table:

    Sales Forecast      
    Unit Sales Year 1 Year 2 Year 3
    Normal driving training 187,330 260,320 258,240
    Professional driving training 802,370 815,430 823,540
    Refresher courses 539,320 770230 1,002,310
    Advisory & consultancy services 265,450 322,390 393,320
    TOTAL UNIT SALES 1,794,470 2,168,370 2,477,410
    Unit Prices Year 1 Year 2 Year 3
    Normal driving training $140.00 $150.00 $160.00
    Professional driving training $600.00 $800.00 $1,000.00
    Refresher courses $700.00 $800.00 $900.00
    Advisory & consultancy services $650.00 $750.00 $850.00
    Sales
    Normal driving training $214,800 $274,000 $333,200
    Professional driving training $120,050 $194,500 $268,500
    Refresher courses $50,110 $71,600 $93,000
    Advisory & consultancy services $139,350 $194,600 $249,850
    TOTAL SALES
    Direct Unit Costs Year 1 Year 2 Year 3
    Normal driving training $0.70 $0.80 $0.90
    Professional driving training $0.40 $0.45 $0.50
    Refresher courses $0.30 $0.35 $0.40
    Advisory & consultancy services $3.00 $3.50 $4.00
    Direct Cost of Sales
    Normal driving training $98,300 $183,000 $267,700
    Professional driving training $66,600 $119,900 $173,200
    Refresher courses $17,900 $35,000 $52,100
    Advisory & consultancy services $19,400 $67,600 $115,800
    Subtotal Direct Cost of Sales $294,100 $699,400 $1,104,700

    6.4 Sales Monthly

    Driving School Business Plan - Sales Monthly

    6.5 Sales Yearly

    Driving School Business Plan - Sales Yearly

    Jennifer H. Adair
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    Personnel plan

    Personnel plan is also an important component of a driving school business plan, so make sure to develop it before thinking about how to start a driving school business.

    7.1 Company Staff

    The company will initially hire the following staff:

    • 1 General Manager for managing the overall operations
    • 2 Administrators/Accountants for maintaining financial records
    • 4 Sales Executives responsible for marketing and discovering new ventures
    • 10 Trainers for providing driving training to members
    • 2 Assistants for undertaking day-to-day tasks
    • 1 Front Desk Officer for acting as a receptionist

    7.2 Average Salary of Employees

     Personnel Plan      
    Year 1 Year 2 Year 3
    General Manager $42,000 $59,000 $76,000
    Accountants $85,000 $95,000 $105,000
    Sales Executives $85,000 $92,000 $109,000
    Trainers $135,000 $155,000 $185,000
    Assistants $60,000 $63,300 $70,000
    Front Desk Officer $35,000 $42,000 $59,000
    Total Salaries $343,300 $380,300 $440,700

    Financial Plan

    The last thing to do before thinking about how to start your own driving school is to develop a financial plan outlining the development of your company over the next few years. The financial plan of Star Driving School is as follows.

    8.1 Important Assumptions

     General Assumptions      
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 10.00% 11.00% 12.00%
    Long-term Interest Rate 10.00% 10.00% 10.00%
    Tax Rate 26.42% 27.76% 28.12%
    Other 0 0 0

    8.2 Brake-even Analysis

    Driving School Business Plan - Brake-even Analysis

     Brake-Even Analysis  
    Monthly Units Break-even 5530
    Monthly Revenue Break-even $159,740
    Assumptions:
    Average Per-Unit Revenue $260.87
    Average Per-Unit Variable Cost $0.89
    Estimated Monthly Fixed Cost $196,410

    8.3 Projected Profit and Loss

     Pro Forma Profit And Loss      
    Year 1 Year 2 Year 3
    Sales $309,069 $385,934 $462,799
    Direct Cost of Sales $15,100 $19,153 $23,206
    Other $0 $0 $0
    TOTAL COST OF SALES $15,100 $19,153 $23,206
    Gross Margin $293,969 $366,781 $439,593
    Gross Margin % 94.98% 94.72% 94.46%
    Expenses
    Payroll $138,036 $162,898 $187,760
    Sales and Marketing and Other Expenses $1,850 $2,000 $2,150
    Depreciation $2,070 $2,070 $2,070
    Leased Equipment $0 $0 $0
    Utilities $4,000 $4,250 $4,500
    Insurance $1,800 $1,800 $1,800
    Rent $6,500 $7,000 $7,500
    Payroll Taxes $34,510 $40,726 $46,942
    Other $0 $0 $0
    Total Operating Expenses $188,766 $220,744 $252,722
    Profit Before Interest and Taxes $105,205 $146,040 $186,875
    EBITDA $107,275 $148,110 $188,945
    Interest Expense $0 $0 $0
    Taxes Incurred $26,838 $37,315 $47,792
    Net Profit $78,367 $108,725 $139,083
    Net Profit/Sales 30.00% 39.32% 48.64%

    Any questions? Get in Touch!

    8.3.1 Profit Monthly

    Driving School Business Plan - PROFIT MONTHLY

    8.3.2 Profit Yearly

    Driving School Business Plan - PROFIT YEARLY

    8.3.3 Gross Margin Monthly

    Driving School Business Plan - GROSS MARGIN MONTHLY

    8.3.4 Gross Margin Yearly

    Driving School Business Plan - GROSS MARGIN YEARLY

    8.4 Projected Cash Flow

    Driving School Business Plan - Projected Cash Flow Diagram

     Pro Forma Cash Flow      
    Cash Received Year 1 Year 2 Year 3
    Cash from Operations
    Cash Sales $40,124 $45,046 $50,068
    Cash from Receivables $7,023 $8,610 $9,297
    SUBTOTAL CASH FROM OPERATIONS $47,143 $53,651 $59,359
    Additional Cash Received
    Sales Tax, VAT, HST/GST Received $0 $0 $0
    New Current Borrowing $0 $0 $0
    New Other Liabilities (interest-free) $0 $0 $0
    New Long-term Liabilities $0 $0 $0
    Sales of Other Current Assets $0 $0 $0
    Sales of Long-term Assets $0 $0 $0
    New Investment Received $0 $0 $0
    SUBTOTAL CASH RECEIVED $47,143 $53,651 $55,359
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations
    Cash Spending $21,647 $24,204 $26,951
    Bill Payments $13,539 $15,385 $170,631
    SUBTOTAL SPENT ON OPERATIONS $35,296 $39,549 $43,582
    Additional Cash Spent
    Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
    Principal Repayment of Current Borrowing $0 $0 $0
    Other Liabilities Principal Repayment $0 $0 $0
    Long-term Liabilities Principal Repayment $0 $0 $0
    Purchase Other Current Assets $0 $0 $0
    Purchase Long-term Assets $0 $0 $0
    Dividends $0 $0 $0
    SUBTOTAL CASH SPENT $35,296 $35,489 $43,882
    Net Cash Flow $11,551 $13,167 $15,683
    Cash Balance $21,823 $22,381 $28,239

    8.5 Projected Balance Sheet

     Pro Forma Balance Sheet      
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $184,666 $218,525 $252,384
    Accounts Receivable $12,613 $14,493 $16,373
    Inventory $2,980 $3,450 $3,920
    Other Current Assets $1,000 $1,000 $1,000
    TOTAL CURRENT ASSETS $201,259 $237,468 $273,677
    Long-term Assets
    Long-term Assets $10,000 $10,000 $10,000
    Accumulated Depreciation $12,420 $14,490 $16,560
    TOTAL LONG-TERM ASSETS $980 $610 $240
    TOTAL ASSETS $198,839 $232,978 $267,117
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities
    Accounts Payable $9,482 $10,792 $12,102
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $9,482 $10,792 $12,102
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $9,482 $10,792 $12,102
    Paid-in Capital $30,000 $30,000 $30,000
    Retained Earnings $48,651 $72,636 $96,621
    Earnings $100,709 $119,555 $138,401
    TOTAL CAPITAL $189,360 $222,190 $255,020
    TOTAL LIABILITIES AND CAPITAL $198,839 $232,978 $267,117
    Net Worth $182,060 $226,240 $270,420

    8.6 Business Ratios

     Ratio Analysis        
    Year 1 Year 2 Year 3 Industry Profile
    Sales Growth 4.35% 30.82% 63.29% 4.00%
    Percent of Total Assets
    Accounts Receivable 5.61% 4.71% 3.81% 9.70%
    Inventory 1.85% 1.82% 1.79% 9.80%
    Other Current Assets 1.75% 2.02% 2.29% 27.40%
    Total Current Assets 138.53% 150.99% 163.45% 54.60%
    Long-term Assets -9.47% -21.01% -32.55% 58.40%
    TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
    Current Liabilities 4.68% 3.04% 2.76% 27.30%
    Long-term Liabilities 0.00% 0.00% 0.00% 25.80%
    Total Liabilities 4.68% 3.04% 2.76% 54.10%
    NET WORTH 99.32% 101.04% 102.76% 44.90%
    Percent of Sales
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 94.18% 93.85% 93.52% 0.00%
    Selling, General & Administrative Expenses 74.29% 71.83% 69.37% 65.20%
    Advertising Expenses 2.06% 1.11% 0.28% 1.40%
    Profit Before Interest and Taxes 26.47% 29.30% 32.13% 2.86%
    Main Ratios
    Current 25.86 29.39 32.92 1.63
    Quick 25.4 28.88 32.36 0.84
    Total Debt to Total Assets 2.68% 1.04% 0.76% 67.10%
    Pre-tax Return on Net Worth 66.83% 71.26% 75.69% 4.40%
    Pre-tax Return on Assets 64.88% 69.75% 74.62% 9.00%
    Additional Ratios Year 1 Year 2 Year 3
    Net Profit Margin 19.20% 21.16% 23.12% N.A.
    Return on Equity 47.79% 50.53% 53.27% N.A.
    Activity Ratios
    Accounts Receivable Turnover 4.56 4.56 4.56 N.A.
    Collection Days 92 99 106 N.A.
    Inventory Turnover 19.7 22.55 25.4 N.A.
    Accounts Payable Turnover 14.17 14.67 15.17 N.A.
    Payment Days 27 27 27 N.A.
    Total Asset Turnover 1.84 1.55 1.26 N.A.
    Debt Ratios
    Debt to Net Worth 0 -0.02 -0.04 N.A.
    Current Liab. to Liab. 1 1 1 N.A.
    Liquidity Ratios
    Net Working Capital $120,943 $140,664 $160,385 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 0.45 0.48 0.51 N.A.
    Current Debt/Total Assets 4% 3% 2% N.A.
    Acid Test 23.66 27.01 30.36 N.A.
    Sales/Net Worth 1.68 1.29 0.9 N.A.
    Dividend Payout 0 0 0 N.A.

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